Columnist image
Dale Jackson

Personal Finance Columnist, Payback Time


We can all hope the new year brings plenty of opportunity. For the average retirement investor looking for some tax relief in 2022, it knocks three times.

As the pandemic continues to rattle markets, a good tax plan is a sure-fire way to keep more of your investment dollars invested. That not only means seizing on whatever tax advantages the government allows, but coordinating them to maximize tax savings over the long run.

Some experts estimate reinvested tax savings can boost a retirement portfolio by 25 per cent; leaving more cash to enjoy in retirement.

Taxes can be complicated, so it’s best to speak with a qualified tax professional since the best strategies depend on an individual’s personal financial situation. But here are three key dates that most investors should be planning for.

January 1: TFSA contribution limit extension

If you were fortunate enough to contribute the maximum allowable amount to your tax-free savings account in 2021, the federal government has added another $6,000 to the contribution limit starting in the new year.

If you withdrew money from your TFSA in 2021, that contribution space can also be reclaimed in 2022.

Unfortunately, determining your personal allowable contribution space is not always easy because it can vary based on contributions and withdrawals made over the years.

Over-contributions can result in penalties, so don’t rely on your financial institution to keep tabs. The Canada Revenue Agency provides online services to determine how much contribution room you have.

There is no deadline to contribute to your TFSA but it’s important to note contribution limits posted by the CRA are normally for the previous year. If you are making more than one contribution in 2022 be sure to add them to last year’s total.

If you follow the rules, the TFSA is the ideal investment vehicle because contributions can be invested in just about anything, gains are never taxed, and you can withdraw funds at any time. 

March 1: RRSP contribution deadline

A registered retirement savings plan contribution can also be invested in just about anything; but if you want to deduct it from your 2021 taxable income, you must make that contribution by the first day in March.

The more income you earned in 2021, the higher your marginal tax rate, and the bigger the tax savings.

Canadians love the tax refund from RRSP contributions; but it’s important to know they only allow savings to grow tax-free until they are withdrawn; ideally at a low tax rate in retirement.

If your income was significantly reduced during the year, and you are already being taxed at a low rate, it might be wise to take a pass on claiming it for 2021. You can still make a contribution and apply it to your 2022 income or any future year when your income is higher. If that is the case, this year’s March 1 deadline does not apply.

If you want to contribute to both your TFSA and RRSP, consider contributing to your RRSP before the deadline and putting the tax refund in your TFSA when it comes in the spring.

April 30: Income tax deadline

If you make an RRSP contribution before the deadline, don’t forget to deduct it from your taxable income when you file ahead of the April 30 deadline.

Also, don’t forget to include any other deductions or credits you or your spouse have accumulated throughout the year.

TFSA contributions are not tax deductible.

Be sure to include all income received during the year including capital, dividend or income gains from non-registered investment accounts.

Like 2020, 2021 has presented complicated tax advantages and challenges due to the pandemic. Most government benefits, such as the Canada Recovery Benefit (CRB), will be fully taxed. Others were partially taxed at the source. If you received pandemic benefits during the year, it might be best to set some cash aside because any amount of tax owing after the deadline will accumulate interest.

If you continued to work from home during the pandemic, the CRA has boosted the automatic home office expenses deduction to $500 from $400 last year.

That could be just a fraction of the real expenses associated with working from home when you add up the portion of rent and utility costs for a home office. 

If you choose the traditional “Detailed Method” you are required to keep all receipts related to your home office. It also requires your employer to fill out a streamlined form (T2200s) stating you were required to work from home.